JTI to Acquire Akij Group

Japan Tobacco Inc. (JTI) announced it has signed an agreement to acquire the tobacco business of Akij Group, Bangladesh’s second-largest tobacco company, further increasing its presence in Asia. The purchase price for the transaction is estimated at US$ 1.5 billion at today’s exchange rates.

“With this investment, we continue to accelerate our expansion in emerging markets that matter, a key component of the JT Group’s growth strategy,” said Mutsuo Iwai, JTI’s executive vice president and president of the tobacco business. “Akij’s substantial market share places us straight at the number two position in Bangladesh, which will expand our quality top-line growth. This transaction will also support our sustainable profit growth objectives in the mid- to long-term.”

Akij holds about a 20% share of the cigarette market in Bangladesh, the eighth largest cigarette market in the world, with volumes exceeding 86 billion units and growing by about 2% year-on-year. This transaction will add around 17 billion units to JT Group’s overall volume. Akij currently occupies the number two position in both the value and base segments, together covering up to 90% of Bangladesh’s cigarette market, with brands such as Navy and Sheikh, respectively.

“Bangladesh is one of the fastest growing economies in the world with a pro-business mindset, which is why we are keen to expand our presence in the country,” said Eddy Pirard, JTI’s president and c.e.o. “The tobacco business of Akij is profitable, has state-of-the-art manufacturing facilities, and a strong distribution network and workforce. With our strong track record of integration, we can accelerate operational efficiencies and introduce some of our global flagship brands alongside Akij’s well-established portfolio.”

The transaction is expected to be completed in the third quarter of the fiscal year 2018 following regulatory clearance.